David Cameron: This Year Is Crunch Time

This year is ‘make or break’ for economic recovery – and we are facing an ‘immense’ challenge, the Prime Minister has warned.

Breaking free of the deficit was ‘always going to be choppy’, he was quoted saying, but Britain must ‘stick to the course’ if it wants to come through.

Inside a speech to some of the world’s most powerful company leaders and politicians at the World Economic Forum in Davos, Switzerland, Mr Cameron said stress tests for banks must be tighter, and described 2011 as a ‘make or break year’.

He said: “This week we had disappointing growth estimates back home. Yes, they were partly driven by the terrible weather which shut down airports, factories and schools – but let’s be frank.

“They also brought home something we have said for months: given the traumas of recent years, the recovery was always going to be choppy.”

Mr Cameron mentioned it was ‘not going to be easy’ to re-invigorate the economic climate but to do this Europe ‘needed to change direction’, stating ‘huge deficits don’t just fall out of the sky’.

He added: “To get there isn’t easy. We can’t just flick on the switch of government spending or pump the bubble back up.

“Making this transformation – and it is a transformation – requires painstaking work and it takes time.

“It involves paying down billions of pounds of debt. New plants and factories need to be built, new products designed, new innovations taken to market, new businesses nurtured.